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21 June, 2024
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Vasilikos: Chinese consortium demanding an additional 200 million

Cyprus-China standoff threatens Vasilikos terminal project


The meeting between Cypriot President Nicos Christodoulides and the Chinese Ambassador in Nicosia has dimmed hopes for the completion of the Vasilikos terminal project, according to a report by Apostolos Tomaras in this Sunday's print edition of Kathimerini. Despite diplomatic efforts, the Chinese consortium remains firm on its objections, stalling further construction.

Unresolved Disputes

During the meeting at the Presidential Palace, it became clear that the Chinese consortium is unlikely to withdraw its objections raised since February. President Christodoulides’ attempt to navigate the issue through political channels with the Chinese government has introduced a new dimension to the dispute. According to Energy Minister George Papanastasiou, discussions are ongoing at both political and technical levels, contradicting claims that the project is beyond rescue.

Contract Termination and Financial Implications

The Cypriot government maintains that both parties aim to find a solution within the project's contractual framework without contradicting ongoing arbitration. The Chinese consortium has sought an additional €200 million from the project contract. ETYFA, the project owner, has the option to terminate the contract, but this move is deemed unlikely due to potential complications. Energy expert Charalambos Ellinas pointed out that terminating the contract could result in significant risks, including the ongoing arbitration for the €200 million claim.

Delays and Complications

One major issue is the FSRU ship Prometheus, currently in Singapore, with nearly all construction costs paid by the Republic. Pending certification and flagging requirements have delayed its journey to Cyprus. A head-on clash with the Chinese could result in further delays, making a compromise solution increasingly critical.

Seeking Compromise

Both sides are maneuvering to minimize costs. The delayed FSRU ship and underperforming projects at Vasilikos weaken Nicosia’s negotiating position. The termination of the contract remains a last resort due to the potential for further delays and complications with the ship’s delivery.

Criticism of ETYFA

ETYFA, the terminal's owner, faces criticism from both the Chinese consortium and local stakeholders. Energy expert Charalambos Ellinas suggests that Cyprus should seek external consultants to assess and advise on the project, emphasizing the importance of informed, techno-economic decisions. Completing the project swiftly could reduce energy costs significantly, potentially offsetting any additional expenses.

The ongoing dispute has highlighted the complexities and challenges in large-scale international energy projects, with both sides striving to find a viable path forward.

[This article is an excerpt of Apostolos Tomaras' article in Kathimerini's Sunday edition]

Cyprus  |  energy  |  China

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